Notwithstanding the trumpeting by the Modi government about the fine health of the economy, the ground reality shows that the Indian economy is in bad shape. The pace of economic growth has slowed down, with GDP growth which was 8.4 per cent in 2024 dropping to 6.4 per cent in Q2FY25 and to 6.25 per cent in Q3FY25. According to a leading global rating agency, our GDP growth rate in fiscal 2026 is expected to be around 6.5 per cent!

Clearly, the wheels of the manufacturing industry have slowed down, and fresh capital investment is sporadic. Besides, technological advancements and employment opportuni ties have fallen sharply. It is no exaggeration to say that the rapid growth of unemployment is a major challenge for the Indian economy. But, except for promises, the government has not taken any concrete steps to boost employment opportunities. And with India recently emerging as the most populous country in the world, the unemployment factor will far reaching implications for India’s development.

According to the India Employment Report 2024 prepared jointly by the Institute for Human Development and the International Labour Organisation (ILO), India’s working population increased from 61 per cent in 2011 to 64 per cent in 2021, and is projected to reach 65 per cent in 2036. However, the percentage of youth involved in economic activi ties declined to 37 per cent in 2022.

According to the Centre for Monitoring Indian Economy (CMIE), an independent think tank, the unemployment rate in India stood at 7.8 per cent in September 2024, a drop from 8.5 per cent in August 2024. The labour participation rate fell from 41.6 per cent to 41 per cent and the employment rate fell from 38 per cent in August 2024 to 37.8 per cent in September 2024.

The situation on the employment front has worsened during the last 11 years. Accord ing to CMIE, the unemployment rate, which was 5.42 per cent in 2013, shot up to 7.8 per cent in 2024. The issue of joblessness is a challenge which has profound consequences for the economic, social, and political life of the country.

The irony is that the government’s claim that the Indian economy is all set to emerge as the third largest global economy means little to ordinary Indians desperate for employment opportunities.

It’s a vicious cycle: Unemployment is caused mainly due to poor economic growth, and in turn perpetuates poor economic growth as people’s purchasing power diminishes and slows the wheels of economic activity. During periods of an economic downturn or reces sion, businesses face lower demand and declining profits, and often diminishing markets. This can lead to cost-cutting measures, including layoffs, hiring freezes and a reduction in the workforce. At the same time, technological advancements, while driving progress and efficiency, can lead to structural unemployment.

As unemployment is crucial for the well-being of individuals, the health of the government and the stability of society, the government should take innovative and effective steps to revive economic activity in the country. Entrepreneurs who can set up manufacturing or marketing facilities should be encouraged. The concept of public private partnership should be promoted and more such joint ventures should be set up. Schools and specialised institutions should be set up to to upskill the workforce. There is thus an urgent need for the government to devise policy strategies to address the prevailing economic challenges and ensure sustainable growth in both the rural and urban areas of the country.